A simple way to keep your team aligned on the targets that matter most
It’s an annual ritual for company leaders to set the critical objectives for the coming year. Yet, many companies make the mistake of creating too many objectives or goals for their team, which often leads to confusion and misalignment. To avoid this, leaders should focus on the three objectives every team needs to stay aligned and successful.
I’ve written before about the power of three. We’ve seen it time and time again: The most successful companies, like Allied Signal or GE, narrow their priorities to their top three objectives.
Why three? Because it’s a list that is easy to remember and communicate to everyone. Once you get past three, it becomes much more challenging for folks to remember, and it muddies the water regarding how they pursue their priorities.
The next question is: what should your organization’s three objectives be? There is a framework we can use to help you identify the objectives every team needs in three categories: financial, operational, and strategic.
Financial Objectives Every Team Needs
Whenever we discuss top-level objectives, it’s always crucial to have a financial goal. Ultimately, in any venture we enter, we aim for economic success. But it’s vital to recognize that financial results are outcomes, not drivers. They are the scorecard for the work we have done. They are not an activity goal.
Examples of financial objectives include growing revenue by 10% or profits by $5 million. It could also be something like adding twenty new clients because you know that by doing so, you will grow the top line of the business.
Finding shorthand ways to communicate financial objectives can be crucial in privately held or family-owned businesses that are reluctant to share the company’s actual financials. In a case like this, setting an objective such as shipping out 17 units a day for the year allows the team to focus on that action, understanding that doing so will have a positive impact on the business’s financials.
Operational Objectives Every Team Needs
Most companies have developed a list of key performance indicators or KPIs to help measure the success of their operations. However, when setting an annual objective tied to operations, aim for something that will cascade and have a significant impact on the organization.
For a manufacturing business, this might mean targeting quality throughout the operation, aiming to achieve less than 1% defects or warranty returns for the year. The target could be to reduce operational costs by 5%.
If you run a service-based business, you might set an objective of 70% utilization of your talent. Alternatively, if you have a SaaS-based online service, you may aim to improve your client retention rate by 15%.
In each of those cases, multiple operational actions need to take place to reach the objective, which helps people understand how the actions they take daily contribute to that larger objective.
Strategic Objectives Every Team Needs
The third objective you can set for your team is one linked to the future of the business. What kind of objective can you establish that will be transformational and impact the company over the next three to five years?
One example was how Jack Welch set a strategic objective for GE, driving the company toward services. At the time, GE was heavily invested in manufacturing capital-intensive products, such as locomotive engines and airplane turbines. By setting a strategic objective around building service offerings around that hardware, Welch was changing the future trajectory of the entire business.
A strategic goal for your business is to expand into Europe or develop other international operations. I implemented this strategy in a company I founded, where we aimed to expand our footprint beyond the U.S. Ultimately, our goal was to secure major clients. However, we couldn’t measure ourselves against financial results, so we measured progress by the number of demos or sales calls we made worldwide. We hoped that the demos would lead to trial orders, which would in turn result in larger deployments.
Keep It Simple: The Core Objectives Every Team Needs
Therefore, when setting your annual objectives, it makes sense to choose a limited set of three that are easy to remember and discuss. If everyone on the team is marching together toward a common goal—both this year and into the future—they will have a significant impact on your business.
By focusing on the three objectives every team needs—financial, operational, and strategic—you give your people clarity, alignment, and direction that drives long-term success.
